L'Enfant and his successors created a great plan for a great city, but plans mean little until transformed through building into three-dimensional reality. If good buildings are not made as a plan is implemented, then the urbanistic and architectural results will be mediocre, no matter how brilliant the plan.
Thus, to appreciate fully Washington's physical character, we must consider the way its buildings are created.
Buildings provide shelter and space for human activity. Through the artful language of architectural design, they also convey ideas about civilization, culture and technology. But buildings are erected for reasons that often lie outside the realms of aesthetics and technology.
Throughout history, most nonmonumental building has occurred in response to perceivable and measurable needs or markets. After recognizing the potential for building something, someone must undertake to satisfy the need or market. This "someone" is the developer or project sponsor, the entrepreneur or owner.
When the government needs a new office building, the sponsoring agency and the General Services Administration are the developer. If the Smithsonian Institution needs a new museum, it is the developer. For remodeling a kitchen or adding a room to a house, the homeowner is the developer. If it is believed that the community needs more office space, retail space, recreational facilities, hotel accommodations or housing, and if there appears to be an economic basis for the demand, then private entrepreneurs undertake development.
Economic demand implies that there is a sufficient number of customers -- tenants, buyers and users -- in the community who have the desire and the financial means to constitute a viable market. Frequently, there is desire but no resources. In the case of governmental and institutional projects, need and marketability are confirmed only when sponsors convince budget authorizers, funding entities or contributors to provide financial support.
But even if the need for a project is genuine and financing is available, many hurdles stand between a beginning idea and a finished building. If you never have undertaken the development of a project, however modest in scope, it is difficult to appreciate the tasks and risks that most developers must face.
The public sometimes views real estate developers stereotypically as well-heeled, insensitive opportunists. Although this may be true of some of them, many developers would rather describe themselves as enlightened capitalists who serve the public, stimulate the economy and promote architecture by engaging in one of the most difficult and complex of all business ventures.
How difficult is it? Developing a project, no matter what its purpose, demands successful completion of a number of interlocking activities before construction can commence:
* Verification of both present and future need through market analysis and preliminary leasing or sales commitments. This must be done for a convention center or a housing project.
* Economic feasibility studies based on market assessments and projecting probable income, development costs, financing costs and operating expenses.
* Control of a site through pre-existing ownership, contract purchase, or land lease -- no site, no project.
* Organization of ownership structure, including the legal form of ownership (corporate, governmental, limited partnership, individual or joint ownership, joint venture) and decision-making protocols (who does what, to whom, when, and for how much?).
* Raising equity funds needed for development costs not covered by borrowed funds -- equity funds are at risk and come from the pockets of individual owners or limited partners in the case of private development, from budget appropriations for government projects, and from assets held or money raised by institutions (such as churches or private schools).
* Obtaining loan commitments from lenders who must be repaid in the future (unlike equity investors) regardless of the success or failure of the project. Typical lenders include commercial banks, savings and loan associations, insurance companies, real estate investment trusts and mortgage bankers. Projects sponsored by state, county and city governments may be financed through underwriters selling bonds to individual and institutional investors who become, in effect, project lenders.
* Design of the project by architects selected and retained by the developer, who prescribes the program requirements and budget. Project design often requires the services of structural and mechanical engineers, civil engineers, landscape architects, land surveyors, interior designers and other highly specialized consultants, with the architect normally coordinating all of the design-related activities.
* Obtaining governmental approvals, dozens of which can be required before issuance of a building permit. These can involve reviews for zoning compliance, petitioning for zoning changes or variances, accommodation of traffic or parking, building code compliance, life safety and fire protection, aesthetic acceptability (as might be determined by the Fine Arts Commission or Pennsylvania Avenue Development Corp.), labor and employment practices, and compliance with environmental or other regulations.
* Construction estimating, bidding and contract (or subcontract) negotiations with selected contractors who will provide the on-site labor, materials and management needed to construct the project in accordance with the architects' and engineers' plans and specifications. Some developers undertake construction themselves or with a selected contractor, whereas most government contracts are awarded to qualified contractors chosen through competitive bidding.
* Active marketing directed at those who will lease, buy, or otherwise use the project. For commercial projects, this involves real estate brokers and leasing agents, plus promotional advertising and aggressive selling campaigns.
When all of the above is accomplished -- need and market verified, site acquired, design complete, approvals and building permits granted, contract awarded, equity and construction financing secured -- then construction of the project can commence. It normally proceeds under the continuous scrutiny of the onwer/developer, the architects and engineers, various governmental building inspectors, the lender who is disbursing construction loan draws, and, last but not least, neighbors and passers-by.
Except for projects built for sale, property management and maintenance become developer/owner responsibilities once construction is complete and the project is put into use. This involves repair, capital improvements, continual leasing efforts, provision of utilities and housekeeping services, and administration of building staff and functions. Owners sometimes hire property management companies specializing in this activity.
Finally, with all the contracts and legal considerations, and all the number-crunching, remember that no developer would be without a good lawyer and a creative accountant.
We now see that a public or private developer must orchestrate and pay for the efforts of a multitude of project participants in order to build. And some of these participants contribute directly to determining the ultimate physical form and economic success of the project.
Unfortunately, scores of pitfalls and unavoidable risks still may jeopardize well-planned projects. Encountered before construction, they can delay or klll projects. During and after construction, they can lead to economic disaster.
To be a developer requires more than a desire to make a profit or satisfy a great community need. It demands patience and stamina, diligent management, a gambling instinct with a willingness to lose or fail, a strong stomach, optimism about the future and an undeniable portion of good luck.
NEXT: The Rewards of Profit, the Risks of Loss